Many merchants today rely on the Internet for processing of credit and debit card transactions. Point-of-sale (POS) terminals that merchants use may be equipped with a DSL, cable, or other components for establishing high-speed Internet connections to facilitate processing of card transactions using an Internet payment processing system. The terminals are equipped with software that extracts transaction data from every card that is swiped and then routes the data for processing using a high-speed Internet connection device. An Internet-based merchant that sells only on the Internet and uses a personal computer rather than a POS terminal for processing transactions may similarly rely on a high-speed Internet connection for processing of card transactions. The PC may be equipped with software that allows the PC to operate as a virtual POS that routes transaction data for processing using an Internet connection.
A high-speed Internet connection to an Internet payment processing system for processing card transaction provides many benefits to merchants. The connection is persistent so there is no need for the card processing device to make a telephone call. As a result, transaction response time is typically one to three seconds. Transactions are processed very quickly so customer wait time is reduced and transaction volume at the merchant site is increased. The addition of new terminals is quick and inexpensive. Finally, transactions are easily routed to any Internet payment gateway.
The same high-speed connection that provides many benefits to merchants when it functions can cause significant inconveniences to the merchant when it malfunctions. The loss of the connection—which can occur for a variety of reasons—results in a loss of the ability to process card transactions through the Internet payment processing system. The inability to process card transactions can be very costly to the merchant. The merchant may lose sales as he is forced to process transactions using another method. Some customers may not wait for a transaction to be processed using a slower method. If the merchant is unable to process transactions at the time of the sale, transaction data must be recorded for later processing. Depending upon the method used to record the transaction data (e.g., manually), it is possible that some of the information required for later processing may be lost or may not be recorded at all. Even if all of the necessary information is recorded for later processing of the transactions, the merchant will need to spend a considerable amount of time entering or transferring transaction data once the connection is functional again.
Another disadvantage of a high-speed Internet connection as an interface to an Internet payment processing system is the cost. The use of a high-speed connection requires the merchant to enter into a contract with an Internet Service Provider (ISP) that provides the necessary equipment and service. Customers incur a one time charge for equipment and installation of the equipment and a monthly charge for use of the connection. For merchants that do not process a large volume of transactions each month, the cost of installing and maintaining a high-speed connection can significantly reduce the merchant's profitability. For some merchants, a high-speed connection may not be cost effective.
Although high-speed connections for card transaction processing are very useful, there may be time when the connection is unavailable or it is not economical for a merchant to maintain the connection. Therefore, there is a need for an alternative interface to an Internet payment processing system.